What do you meant by corporate governance?

What do you meant by corporate governance?

Answer: Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The word  governance  comes  from  the  Latin  word  ”gubarnare”  which  means  ―to  steer.  So,  the ordinary meaning of governance is the manner of directing and controlling the actions and affairs of an entity.

For example, the directors in turn appoint an executive or number of executives to oversee the affairs of the entity. Out of the numbers of executives one is appointed as Chief Executive who is responsible to run the show on behalf of the Board of Directors, which in turn represents the stockholders. In such a company the Chief Executive is sole responsible and accountable to the Board of Directors for all purposes. It is the role of the directors to govern the actions of the executive(s) and ensure that the interests of the shareholders remain the prime agenda of all the functions and decisions.